Wednesday, September 18, 2013

Wages - Day Rate Payment - Going

This is the method of day pay. It is indeed so old and so deep-rooted that one is almost tempted to say that if we go back to the source of things it is the only wage method; for when piece rates are fixed you will always find that, consciously or unconsciously, the employer and the workman  both compare in their minds the piece rate proposed with the  time they think the job is going to take, so that it seems to come down, after all, to the question not what is the job worth, but what is the time that it takes to do the job worth?
Now the conception underlying day pay is that a certain sum of money is arithmetically equal to a certain number of hours spent by a man any man at doing a certain kind of work. For example, every man digging dirt is worth $1.50 for ten hours' labor; every man laying brick is worth $5 for eight hours' labor. Stated this way, baldly and with- out qualification, the notion seems so foolish that it is hard to see how it ever became so generally adopted in practice.
It would be as intelligent to base an economic system on the
hypothesis that a string is always 6 feet long or that all
horses run equally fast. Nevertheless, the conception per-
sists, and will long continue to persist, and you will have to
deal with it. It is in the moral code of many labor unions as
the first and great commandment. The reason, as already
suggested, is that the unions have found it necessary to re-
sort to collective bargaining and to demand a universal wage
rate, chiefly because there has been in general no method
practiced by employers for fair and honest individual bar-
gaining with each man according to his ability. The result
of the whole thing is a struggle between opposing forces,
the employer trying to push the day wage down because he
has no satisfactory assurance of anything but minimum effi-
ciency on the part of his workmen, and therefore he wants
to pay the minimum price; and the men trying to force the
rate up because they can not get it up in any way except by

force. This sort of struggle is constantly going on, with
variable results. Where labor is abundant or poorly organ-
ized, and where the employer or sub-bosses have a genius
for driving, probably as highly efficient results are secured
under the day-wage plan as under any other ; that is, the em-
ployer gets as high a product for the dollar he expends as he
can get by any method. Where labor is powerful and well
organized and much in demand, the results secured under the
day-wage system are perhaps as inefficient, and as little re-
turn is obtained for each dollar expended, as in any applica-
tion of capital to productive or constructive work, except,
perhaps, in deliberately dishonest political jobs.

Nevertheless, the day wage remains to-day the method of
payment for a very large proportion, perhaps a large ma-
jority, of all service. I have dwelt strongly upon its un-
favorable features, but of course they are to a certain extent,
even if imperfectly, remedied in practice. The extremely
good man cannot be held down, and he will break through
even the dead level of day pay ; so the fallacy of assuming that
all men are equally worth $1.50 a day is corrected fractionally
by picking out here and there a peculiarly able man and mak-
ing him a job boss or a sub-foreman at $2 or $2.50, while
the hopelessly incapable fellow is fired off the job and gets no
wages at all. The plan as a whole is one of those rough
and ready ones that the world has always used and always
will use. And k does express, although it expresses it badly,
a certain vital truth; that is, that time, after all, is the one
supreme value that must be seized and used moment by mo-
ment or it is lost forever. If machinery is idle the oppor-
tunity may usefully be taken to overhaul and repair it; if
material is idle it may be worked over into something else
which is active; if dollars are idle they are only dormant and
will come to life and into circulation as soon as there is an
opportunity. But if hours are idle they are dead and gone
forever. This truth of the fundamental value of time is

recognized by the day-pay system. You will find the system
in use everywhere and you will have to get along with it;
nevertheless, in most cases a much more intelligent plan for
hiring time than the day-wages plan can be devised and may
be applicable.

Perhaps the first deliberate effort in this direction was the
establishment of piece rates in place of day pay. By these
rates the unit of adjustment as between employer and em-
ployee is not so much time spent at labor, but so much work
completed. The unit task may be of the most diverse kind
in different occupations a ton of coal mined, a locomotive
mile run, a yard of cloth woven, a casting made, a certain
area of type set, a face shaved or a head of hair cut. The
fundamental idea of day pay is that of mathematical equiva-
lence between money and time; the fundamental idea of piece
work is that of mathematical equivalence between money and

If, for example, I am working as a journeyman hat-
maker 1 at day wages, I tacitly accept the truth of the
proposition that ten hours of my time are worth, say, $2.
That is, I agree with my employer upon the truth of this
equation :

(A) 10 hours time=$2.oo

I come into the shop at 7, go home at 6, with an hour for
lunch. I loaf as much as I dare; the boss watches me and
drives me as much as he can, and perhaps in the average I
make about one hat a day. Now suppose I go on to piece
work. I set in the background the proposition " ten hours
equals $2," and base my creed on the tenet that u making one
hat equals $2." In other words, my employer and I fix
our eyes on a new equation :

(B) Making one hat=$2.oo

1 It is scarcely necessary to say that the supposition is taken at ran-
dom, for illustration only, and does not in the least reflect actual con-
ditions in the hat-making industry.

The longer I dawdle, the longer it takes me to get that
$2. On the other hand, if I work fast I can perhaps get
through by mid-afternoon or even earlier and go fishing.
Or if I choose to stay I can begin on another hat. Very
possibly by diligence and study I can improve the tools or
the operations a little, or I may carry on the making of two
hats at once, working on each during necessary pauses for
the maturing of processes on the other ; and I may soon be
turning out three hats in two days or even two hats in one
day. The boss will be paying me 50 per cent to 100 per
cent more wages in a given time than he did formerly. Yet
his hats are costing him no more. Indeed, they are costing
him less, for his general expenses for shop rent, light, heat,
superintendence (that " overhead burden " of which we
have already spoken) are no greater than they were before,
and yet he is turning out more hats to absorb these charges.
A smaller fraction of this cost, therefore, attaches to each

Now I said that in going on to piece rates the boss and I
both set in the background the proposition that ten hours
equal $2. I used those particular words advisedly, be-
cause that idea at best is only retired. It is not dismissed.
It lurks in the background of our minds persistently. The
price of $2 per hat was fixed as a piece rate not because we
really believed it was worth $2 to make a hat, but because
on the average that paid me $2 for a day's time. In other
words, we accepted formula (B) not because we believed
in its abstract truth, but because we believed this :

(C) Making one hat=io hours time.

As soon as (C) proves untrue, (B) no longer follows
from (A) and my employer at least loses faith in it. When
I begin to get $3 a day the boss begins to get uneasy, and
when I make $4 a day he is probably certain that some-
thing is wrong. He believes no journeyman's time is worth

$4 a day. The fact that he is turning out larger product
from his shop in the same time at less cost does not impress
him as it should, while the $4 a day to a " $2 man " looks
enormous. He begins to believe that he is paying too
much for the making of a hat. Probably he decides that
if two hats can be made in one day, the making of a hat
is not worth more than $i, and he cuts my piece rate in
half. I have to work twice as hard as I did before and
get no more for it. On the other side, my fellow workmen
are displeased. They are contented with the old order and
want to work along turning out about one hat a day and
getting $2 for the day's time. They say " if you show
the boss that two hats can be made in a day, he will think
that we are all a worthless lazy lot, and he will want to
drive us up to your pitch or get rid of us. You are killing
the job." So these two influences combine to discourage
me against the great and apparently fortunate incentive
which first led me to rejoice in the piece rate and to see so
much apparent advantage in it.

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